Should I E-Bank?

What is electronic banking (or e-banking, as it’s commonly called)? Simple. You use machines to do your financial transactions instead of people.

Although it sounds very Y2K, the concept of electronic banking has actually been around for awhile, starting with wire transfers.

Basically, a bank would take the money at one end, plus a fee, and credit the bank or institution at the other end. Think of all those Western Union commercials you’ve seen.

Actually, wire transfers are still around. But with the introduction of personal computers, high-speed modems and the Internet, we’ve moved into a whole new universe of electronic options.

Want to transfer money between accounts? Call into your local bank with their special software and enter transfer and the amount. Or, dial into your investment house and do the same thing. You can also pay bills, apply for credit, or have money deducted from your account automatically and sent electronically into a mutual fund account.

The nice thing about electronic banking is that you can do it at any time of the day or night, and you don’t have to actually deal with anyone else (except, perhaps, your sleepy spouse who can’t stand the blue-green light from the computer monitor in the middle of the night).

Right now, some banks charge a small fee of $5 per month to use electronic banking, but will waive other fees. In the future, those fees will probably drop as more banks offer electronic banking.

Is It Safe?

Safety is the biggest concern people have when they think about sending money through the Internet. These fears are magnified every time we read a story in the newspaper about 13-year old computer geniuses hacking their way into the Pentagon or messing with social security numbers.

I had second (and third) thoughts about trusting my retirement to a bunch of “Inside Intel” chips when one of the largest credit bureaus first offered credit reports online and people started tapping in and receiving other people’s credit histories. After all, how hard it is to learn someone’s mother’s maiden name?

On the Web, that might take all of 5 minutes, if you know where to look and are using a high-speed modem.

The truth is, financial institutions spend plenty to make sure they have the best online security money can buy. And it’s extremely unlikely anyone will be able to tap into your account and suck it dry. (And anyway, that’s why you save your bank statements each month!)

Those who do use electronic banking say its pleasures far outweigh any concerns they might have about security. It’s nice to be able to have the mortgage check sent on the day its due and be able to collect interest up until the minute it’s sent.

PERSONAL FINANCE TIP: If you’re the kind of person who’s worried about these sorts of things, you may want to wait a few years until the Internet has been thoroughly vetted. Until then, be sure you use permanent markets to write out your checks you send in the mail.

Scam artists have been known to simply steal mail, slit open envelopes, and rinse the writing off of checks before writing them out to cash. High-tech or low-tech, criminals will find a way, so protect yourself.

The Last Word

Should you choose a bank specifically because it offers online banking?

In the not-too-distant future (meaning, before the next generation comes and goes), most folks will have a computer. Most will want to do more than simply write letters and play Solitaire.

These individuals will be spending their time perusing the Internet and will undoubtedly end up banking and trading by computer. By that time, nearly every bank will offer some kind of online banking, probably for free.

Today, you’ll pay anywhere from $5 per month on up for the convenience of e-banking, and that may be worth it to you. I love that I can trade my retirement accounts online for a nominal amount, and that the accounts update automatically when I sign on.

When the convenience outweighs the cost, you should probably take the plunge. You&#146;ll have greater access to, and greater control over, your cash.